Review Question

[Overimprovement]

If an appraiser completes a typical field review (standard form) for a lender, and ends up opining a different value, can this review report then serve as LTV support for the loan related to the subject?
Does it matter if it is port, fannie, FHA, or VA?

In other words, can this review report check all the regulatory boxes (ignore any potential self-imposed lending guidelines) the lender needs to move ahead with the loan?

I guess two main scenarios present themselves:
1) LTV with value from original appraisal (OA) was fine, but now is not--can lender use either one? Is a 3rd value now required?
2) LTV with OA was too high, but now is fine for proposed loan type, as reviewer opined higher value.

 

[J Grant]

that would be up to the lender, or UW ? I have no idea if regulators have any "rule" about it.... Why would it matter to you? Interesting question but I don't know the answer. If anyone has experience on lending side, they might know.

 

[BRCJR]

The lender is charged with using the appraisal deemed most reliable.
If the decision is ever questioned by a regulatory entity there should be documentation as to why the report chosen was chosen and why the one not chosen was not chosen.

 

[Tim The Enchanter]

And probably not just that they picked the higher number.

 

[Tom4value]

If I understand your question, then no, the client cannot use your value for the loan. Going back to “identifying the problem”, the purpose of the assignment, the intended use, is to provide an opinion on the appraisal. An intended use of the review is not to provide an opinion of value for a mortgage lending transaction.

 

[BRCJR]

If I understand your question, then no, the client cannot use your value for the loan. Going back to “identifying the problem”, the purpose of the assignment, the intended use, is to provide an opinion on the appraisal. An intended use of the review is not to provide an opinion of value for a mortgage lending transaction.

If the review turns into an appraisal, by virtue of a different opinion of value being formed, why not?
The lender will have been provided a second opinion of value and could use it if deemed most credible.

 

[Tom4value]

If the review turns into an appraisal, by virtue of a different opinion of value being formed, why not?
The lender will have been provided a second opinion of value and could use it if deemed most credible.

Again, the intended use of the review is, "for the lender/client to evaluate the accuracy and adequacy of support of the appraisal report under review". Using your report for a mortgage lending transaction is not an intended use.

By your meaning of "the review turns into an appraisal", it would be a new assignment with the intended use being for a mortgage lending transaction. It would also mean retyping it onto a URAR or a 2055 and probably a full inspection. It cannot be on the field review report.

 

[glenn walker]

Yes some lenders do use the field -review as the value- It determined the original report is too high or of real poor quality. So when you do a field review -with lower value you now own it.

 

[Mike Kennedy]

https://www.FDIC.gov/regulations/laws/rules/5000-4800.html

XV. Reviewing Appraisals and Evaluations

The Agencies' appraisal regulations specify that appraisals for federally related transactions must contain sufficient information and analysis to support an institution's decision to engage in the credit transaction. For certain transactions that do not require an appraisal, the Agencies' regulations require an institution to obtain an appropriate evaluation of real property collateral that is consistent with safe and sound banking practices. As part of the credit approval process and prior to a final credit decision, an institution should review appraisals and evaluations to ensure that they comply with the Agencies' appraisal regulations and are consistent with supervisory guidance and its own internal policies. This review also should ensure that an appraisal or evaluation contains sufficient information and analysis to support the decision to engage in the transaction. Through the review process, the institution should be able to assess the reasonableness of the appraisal or evaluation, including whether the valuation methods, assumptions, and data sources are appropriate and well-supported. An institution may use the review findings to monitor and evaluate the competency and ongoing performance of appraisers and persons who perform evaluations. (See the discussion in these Guidelines on Selection of Appraisers or Persons Who Perform Evaluations.)

When an institution identifies an appraisal or evaluation that is inconsistent with the Agencies' appraisal regulations and the deficiencies cannot be resolved with the appraiser or person who performed the evaluation, the institution must obtain an appraisal or evaluation that meets the regulatory requirements prior to making a credit decision. Though a reviewer cannot change the value conclusion in the original appraisal, an appraisal review performed by an appropriately qualified and competent state certified or licensed appraiser in accordance with USPAP may result in a second opinion of market value. An institution may rely on the second opinion of market value obtained through an acceptable USPAP-compliant appraisal review to support its credit decision.

 

[Meandering]

https://www.FDIC.gov/regulations/laws/rules/5000-4800.html

XV. Reviewing Appraisals and Evaluations

The Agencies' appraisal regulations specify that appraisals for federally related transactions must contain sufficient information and analysis to support an institution's decision to engage in the credit transaction. For certain transactions that do not require an appraisal, the Agencies' regulations require an institution to obtain an appropriate evaluation of real property collateral that is consistent with safe and sound banking practices. As part of the credit approval process and prior to a final credit decision, an institution should review appraisals and evaluations to ensure that they comply with the Agencies' appraisal regulations and are consistent with supervisory guidance and its own internal policies. This review also should ensure that an appraisal or evaluation contains sufficient information and analysis to support the decision to engage in the transaction. Through the review process, the institution should be able to assess the reasonableness of the appraisal or evaluation, including whether the valuation methods, assumptions, and data sources are appropriate and well-supported. An institution may use the review findings to monitor and evaluate the competency and ongoing performance of appraisers and persons who perform evaluations. (See the discussion in these Guidelines on Selection of Appraisers or Persons Who Perform Evaluations.)

When an institution identifies an appraisal or evaluation that is inconsistent with the Agencies' appraisal regulations and the deficiencies cannot be resolved with the appraiser or person who performed the evaluation, the institution must obtain an appraisal or evaluation that meets the regulatory requirements prior to making a credit decision. Though a reviewer cannot change the value conclusion in the original appraisal, an appraisal review performed by an appropriately qualified and competent state certified or licensed appraiser in accordance with USPAP may result in a second opinion of market value. An institution may rely on the second opinion of market value obtained through an acceptable USPAP-compliant appraisal review to support its credit decision.

Yes Mike, that is great for the IAEG,

but when the review was ordered on the Fannie Field Review Form 2000,



Originating a loan is not an intended use, and,
reliance upon,
is not
use of.

That, and,
the IAEG was written before the UAD.

and now the GSEs require the mortgage origination appraisal in UAD and be uploaded to the system, prior to the closing of loan.

So the entire report format does not meet the GSE required scope of the work for a loan origination appraisal.

..